How does remote working affect our local economies?

This research programme was funded by the Economic and Social Research Council, ES/V004913/1, ``The geography of post COVID-19 shutdown recovery risk in UK economic activity. Implications for recovery inequality and targeted stimulus''

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*This figure shows the estimated change in neighbourhood economic activity across London due to the increase in remote working during the Covid-19 pandemic. Red neighbourhoods show a decrease in activity, blue neighbourhoods show an increase in activity.

In the wake of the pandemic, the large shift to remote working has remained. This research agenda focuses on understanding the economics forces behind, and economic consequences of, the spatial distribution of workers and work. In recent work, Dr Jesse Matheson looked at how the shift to remote working has changed where work is done, what this means for businesses and workers providing locally consumed services (restaurants, hairdressers, gyms, etc), the impact this has on housing markets, and how this will ultimately change the shape of our cities.

Key findings

Remote working moves economic activity from large urban centres to residential suburbs.
The average amount of work done remotely has permanently increased by two days per week, relative to pre-pandemic levels.
The permanent change in remote working will shift £3 billion in annual retail and hospitality spending out of the largest city centres in England and Wales.
These changes in spending will lead to fewer jobs available in local services and exacerbate inequality in the labour market.
Remote working can be attributed to the recent decline in the premium paid for central London residential property, and the rapid rise in housing prices in traditionally less expensive cities such as Sheffield.

This research programme was funded by the Economic and Social Research Council, ES/V004913/1, “The geography of post COVID-19 shutdown recovery risk in UK economic activity. Implications for recovery inequality and targeted stimulus”.

Articles based on academic work

Remote working and the new geography of local service spending, Vox EU, 17 November 2022.

What does remote working mean for regional economies in the UK?, Economics Observatory, 04 February 2022.

Zoomshock: how is working from home affecting cities and suburbs?, Economics Observatory, 15 February 2021.

The geography of working from home and the implications for the service industry, Vox EU, 11 February 2021.

Five charts that reveal how remote working could change the UK, The Conversation, 2 February 2021.

Teleworking will reshape labour markets and cities, VoxEU, 6 December 2022.

Academic Papers

How the rise of teleworking will reshape labor markets and cities, T. Gokan, S. Kichko, J. Matheson, J.F. Thisse . CESifo Working Paper No. 9952. (2022)

Remote working and the new geography of local service spending, G. De Fraja, J. Matheson, P. Mizen, J. Rockey, and S. Taneja. Centre for Economic Policy Research, Discussion Paper 17431 . (2022)

Covid reallocation of spending: The effect of remote working on the retail and hospitality sector, G. De Fraja, J. Matheson, P. Mizen, J. Rockey, S. Taneja, and G. Thwaites. Sheffield Economics Research Paper Series, number 2021006. (2021)

Zoomshock: The geography and local labour market consequences of working from home, G. De Fraja, J. Matheson and J. Rockey. Covid Economics: Vetted and Real-Time Papers. 64 (2021), 1-41.